Judge Rejects Trump Administration Effort To Cut Off CFPB Funding
By CU Today Staff —
EUGENE, Ore.—A federal judge has rejected the Trump Administration’s effort to cut off funding for the Consumer Financial Protection Bureau, ruling the agency’s director has a legal duty to seek money from the Federal Reserve needed to operate the Bureau.
U.S. District Judge Ann Aiken on Friday granted partial summary judgment to a coalition of 22 states and the District of Columbia, finding former Acting CFPB Director Russell Vought’s funding decisions were contrary to law, unlawfully withheld agency action and violated the constitutional separation of powers.
The dispute centered on the meaning of “combined earnings” in the Dodd-Frank Act, which directs the Fed to transfer to the CFPB the amount its director determines is reasonably necessary, subject to a statutory cap. Vought, relying on a Justice Department Office of Legal Counsel opinion, had argued the term meant Federal Reserve profits after expenses and that because the Fed was operating at a loss, no money was available for the Bureau. Aiken rejected that interpretation, ruling “combined earnings” means the Fed’s gross revenues before expenses are deducted.
The decision is another court defeat for an administration policy that threatened to leave the CFPB without operating funds. Vought initially requested $0 from the Fed in February 2025 because the Bureau had sufficient reserves, but later took the position that the CFPB could not seek additional Fed funding while the central bank was losing money. Under court order, Vought subsequently requested $145 million in January 2026 and continued seeking funds while litigation proceeded. A California federal judge separately rejected the Administration’s funding interpretation in March, a decision that is on appeal before the Ninth Circuit.
Aiken vacated Vought’s determination that CFPB funding was unavailable when Fed expenses exceeded income and his decision not to request funding for fiscal 2026. She declined to issue a separate injunction covering fiscal 2026 because the fiscal year ends Sept. 30, but declared that the Fed must transfer amounts the CFPB director determines are reasonably necessary under the statute. The Administration had argued the case was effectively moot because the Fed had apparently returned to profitability, but Aiken rejected that argument, saying that did not resolve whether the CFPB director had authority to make the disputed funding determination in the first place.
Originally reported by CU Today.